Correlation Between Legg Mason and Asg Global
Can any of the company-specific risk be diversified away by investing in both Legg Mason and Asg Global at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Legg Mason and Asg Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legg Mason Bw and Asg Global Alternatives, you can compare the effects of market volatilities on Legg Mason and Asg Global and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Legg Mason with a short position of Asg Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legg Mason and Asg Global.
Diversification Opportunities for Legg Mason and Asg Global
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Legg and Asg is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Legg Mason Bw and Asg Global Alternatives in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asg Global Alternatives and Legg Mason is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Legg Mason Bw are associated (or correlated) with Asg Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asg Global Alternatives has no effect on the direction of Legg Mason i.e., Legg Mason and Asg Global go up and down completely randomly.
Pair Corralation between Legg Mason and Asg Global
Assuming the 90 days horizon Legg Mason Bw is expected to generate 1.66 times more return on investment than Asg Global. However, Legg Mason is 1.66 times more volatile than Asg Global Alternatives. It trades about 0.14 of its potential returns per unit of risk. Asg Global Alternatives is currently generating about 0.11 per unit of risk. If you would invest 1,890 in Legg Mason Bw on September 3, 2024 and sell it today you would earn a total of 490.00 from holding Legg Mason Bw or generate 25.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legg Mason Bw vs. Asg Global Alternatives
Performance |
| Timeline |
| Legg Mason Bw |
| Asg Global Alternatives |
Legg Mason and Asg Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legg Mason and Asg Global
The main advantage of trading using opposite Legg Mason and Asg Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legg Mason position performs unexpectedly, Asg Global can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Asg Global will offset losses from the drop in Asg Global's long position.| Legg Mason vs. Ultramid Cap Profund Ultramid Cap | Legg Mason vs. Hennessy Nerstone Mid | Legg Mason vs. Boston Partners Small | Legg Mason vs. Fpa Queens Road |
| Asg Global vs. Vanguard Star Fund | Asg Global vs. Western Asset High | Asg Global vs. Gmo High Yield | Asg Global vs. Lgm Risk Managed |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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